Auto Dealers Say Bailout Critical to Local Economy

Local General Motors, Chrysler and Ford dealers aren't proud that their corporations need to be bailed out, but they say it's better than letting them go bankrupt.

Chrysler and GM CEOs told Congress that they need billions of dollars in federal loans to avoid running out of money by the end of the year. GM is asking for up to $18 billion overall, Chrysler for $7 billion. Ford isn't as bad off, but wants $9 billion just in case.

Instead of that $34 billion total desired, Congress and President Bush are close to lending the Big Three $15 billion, according to news reports. That would be enough to get them to March, when they could negotiate a longer-term bailout with the Obama Administration.

"I know there's a lot of outrage over the bailout," said Jeff Nimmich, general sales manager at Bremerton Dodge. "I look at it as two sides of a coin. At a layman's level, I'd be frustrated to give $15 billion to automakers who have been overcompensated and mismanaged for years. But from a strictly national economic viewpoint, the car industry directly or indirectly affects one of every six jobs in the United States."

If the automakers went bankrupt, he said, unemployment could soar to possibly 20 percent, and local governments would lose a large chunk of their revenues. In Kitsap County, more than 10 percent of sales taxes come from new and used car dealers. In Bremerton, it's more than 25 percent.

"It would have a huge, huge impact on the social services of this nation because there is not a bigger revenue maker in the world than the automotive sales tax," Nimmich said.

The federal bridge loans would come with strings attached. The manufacturers would have to give up their corporate jets, cut pay and benefits, mass-produce fuel-efficient cars and postpone dividends until taxpayers are repaid. The CEOs have already offered to cut their pay to $1 a year. President Bush would also appoint a government overseer to make sure the carmakers were taking steps to reinvent themselves.

Nimmich has no problem with the restrictions, but worries that the "car czar" wouldn't have enough car expertise.

"I'm kind of ashamed to be part of that bailout," he said. "I would think that we would have learned years ago after seeing the success of imports how to build a car and how to be proactive instead of reactive."

Grant Diekman, general manager of Courtesy Chevrolet in Poulsbo, won't concede that quality and fuel efficiency of American cars is a problem. Asian carmakers are struggling, too.

"That we're bailing out Detroit because it didn't make the right cars is not the case," he said. "GM has six cars over 30 mpg in its fleet. No other manufacturer has six models."

Quality is the result of plant technology, and the best plants are in the United States, he said.

The reason the Big Three need some help, Diekman said, is because the banks aren't lending money, even though the government is giving them $700 billion for that purpose.

"I'll tell you exactly what our problem is," he said. "We can't sell cars because the banks have changed the structure so quickly," he said.

Government intervention could result in concessions by the union, which Diekman and Nimmich agreed would be a good thing.

Nimmich doesn't believe there's much chance that Bremerton Dodge could be closed. Sales had been down slightly for most of the year, but picked up in October and November, when it was the top Dodge dealer in the state, he said.

At Haselwood Auto group, sales are also down slightly at Toyota and Honda dealerships, and have dipped more at its domestic stores. More people are buying certified used cars instead of new ones, said general manager Rick Wiler.